As demands for traceability increase, some thrive, others struggle

Today, companies in many industries are being required to do more and more in the area of traceability. From pharmaceuticals to medical device manufacturing to food processing, oil and gas, and aerospace and defense – for government regulators and powerful consumers, they want to know it all. These companies now need visibility into their complete supply chain, from receiving raw materials or components to inventory management, including the work of contract suppliers.

Hans Hansen, Vice-President of Sales for VistaVu Solutions, sees companies taking a wide variety of approaches to traceability. A growing number are using sophisticated ERP solutions, with SAP Business ByDesign a popular choice.

“For many companies, the key requirement is that they’re subject to regulation from the Food and Drug Administration, and corresponding authorities in Canada and the EU,” says Hansen. “These companies have to be able to trace back anything that can affect the quality of the product. What are its components, where did they come from and when were these delivered?”

He explains that traceability is natively built into Business ByDesign, so companies can start using its traceability functionality from day one. These companies can smoothly manage their regulatory compliance, but having brought traceability on-board through Business ByDesign, they can also use it for Quality Assurance. They can document each batch of product made, perform quality tests and loop back to determine which materials, components and process-steps resulted in the best quality.

Companies making pharmaceuticals or medical devices are obligated by regulatory authorities to provide traceability. The same goes for food processing companies. When a food safety failure endangers the public’s health and confidence, every minute counts.

“Food companies are subject to what’s known as the two-hour rule,” says Hansen. “They need to be able to specify not only the shipment that is subject to recall and which companies and outlets it was shipped to. They also need to go the other way and trace back the raw materials. So it’s what I call vertical and horizontal traceability, and they have two hours to produce that if the USDA or FDA walks through the door.”

As for the aerospace and defense industry, with billions of dollars of equipment and labor on the line, any kind of malfunction is disastrous – not only to the company’s financials but also could be life threatening. For those manufacturing companies with Department of Defense (DOD) contracts, their compliance to those rely heavily on traceability within the early stages of the engineering and product definition stage.

Traceability isn’t only for products where quality can be a life-or-death issue. Other times, it’s just good business. Companies that make serial-numbered goods, in Oil and Gas for example, use the traceability functionality in SAP Business ByDesign to manage warranty issues. If one component supplier is associated with a disproportionate number of warranty claims, the manufacturer can demand improvements or compensation.

Companies using leading-edge ERP solutions like SAP Business By Design are growing in number, in response to increasing regulatory and market demands for traceability. Hansen also sees many companies – even those in the life sciences field – still using manual methods of process tracking. To these companies, the prospect of even greater regulatory demands in the future won’t come as welcome news.

According to Hansen, that’s exactly what’s happening and it’s why more of these manually tracking companies are taking a close look at SAP Business By Design. Meanwhile, companies already running Business ByDesign can take these developments in stride.

“The demand for traceability is only going to increase,” says Hansen. “In the food and beverage manufacturing industry, in life sciences, we are now talking about universal traceability. It’s not only what you bought from your supplier, but also where did your supplier get their material or ingredient from, all the way down to the first supplier or the farmer.”

For more information on how SAP Business ByDesign can help with tracability in your industry, visit our solutions page.